USD/JPY: some stabilisation in the yen, but . . .  - Scotiabank

JPY is trading within a relatively tight range and consolidating its decline from the late November high. 

Key Quotes:

"Domestic PPI data were stronger than expected, allowing for some stabilization in JPY. 

Interest rate differentials remain bearish however, and the 2Y spread has extended to a fresh high approaching 200bpts at levels last seen in mid 2008. The 10Y spread has been range bound since late October."

"Measures of implied JPY have fallen considerably, and risk reversals are showing a continued moderation in the premium for protection against medium-term JPY strength."